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Peters demand for lobster is unit elastic with

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Unformatted text preview: l good c. Peter’s demand for lobster is unit elastic with respect to income d. Peter’s demand for lobster is income elastic and lobster is an inferior good e. Peter’s demand for lobster is income inelastic and lobster is an inferior good [Income elasticity is less than 1 and positive] 5. Suppose each producer can produce at most one unit of output with the MCs described in the table below: Producer A Marginal cost ($) 5000 B 3000 C 2500 D 2000 E 1500 Assume the market price is $2750. At market equilibrium, what is the total producer surplus for all producers combined? a. $250 b. $750 c. $2500 d. $2750 *e. None of the above [The correct answer is 2250] 6. Consider the market for cider. Assume that the only two consumers are Wayne and Julia and each has the demand curve given by the following: Julia: p = 100 – 4q Wayne: p = 60 - 2q if the market price is equal to 20: a. Receive differ marginal benefit from the last cider consumed but have the same total consumer surplus b. Receive differ marginal benefit from the last cider consumed and have different total consumer surplus c. Receive the same marginal benefit from the last cider consumed and have the same total consumer surplus *d. Receive the same marginal benefit from the last cider consumed but have different consumer surplus e. More information is required to answer this question [The MB is the same since their MB from the last cider consumed is approximately 0. However, they consume different amounts and have different CS] 7. Assume that the market price of a goos...
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